A price guarantee with a back door: SCA loses its extreme-urgency suspension against the Geraardsbergen public welfare centre
When the Geraardsbergen public welfare centre (OCMW) halted its incontinence-materials contract and switched to a negotiated procedure without prior publication because both tenders contained a reservation on the required price guarantee, the Council of State refused suspension: SCA’s ‘guarantee undertaking’ left room to adjust the maximum price and thereby departed from an essential, price-related specification.
What happened?
The Geraardsbergen OCMW launched an open call for tenders for the purchase of incontinence materials for the Denderoord and De Populier care homes, estimated at 241,323 euros excl. VAT, under special specifications L/2012/002. The award criteria were quality (out of 40), the tender price (out of 30), the turnover discount (out of 10), the proposed approach and support (out of 10) and the price-guarantee system (out of 10). At the electronic opening on 26 September 2012 there were two tenderers: SCA Hygiene Products and Ontex. Both were selected and initially found regular. On 27 February 2013 the welfare council awarded the contract to Ontex — ranked first with 83.5 out of 100 against 79.55 for SCA — for 215,639.98 euros excl. VAT. SCA challenged that award under extreme urgency (case A. 208.274), but the OCMW withdrew the award decision on 27 March 2013, after which the Council, by judgment no. 223.106 of 4 April 2013, declared that first action without object. That same 27 March 2013, however, the OCMW also decided to halt the ongoing procedure and move to a negotiated procedure without prior publication under article 17, § 2, 1°, d) of the Act of 24 December 1993, considering both tenders irregular because they contained a reservation on the required price-guarantee system. The sticking point lay in the ‘guarantee undertaking’: the specifications required a performance commitment with a maximum cost per incontinent resident per day, but SCA (0.75 euro/day) set only a lower limit and reserved the right to adjust the limits by mutual agreement in the event of ‘significant deviations, e.g. a very sharp rise in care needs’; Ontex (0.72 euro/day) also deviated. SCA challenged this halt and restart with a new extreme-urgency action on 2 May 2013. The Council found none of the three pleas serious. On the first plea it held that SCA’s reliance on article 16 of the general contracting conditions (revision of the contract) was not prima facie convincing: the wording of the guarantee undertaking went beyond article 16 and thus amounted to a reservation on a price element, which under article 89 of the Royal Decree of 8 January 1996 concerns an essential specification and leads to substantial irregularity — the specifications, in article I.15, expressly stated that any reservation entails that sanction. The second plea — that Ontex lacked ‘predominantly positive’ financial ratios and should not have been selected — was likewise not found serious. The third plea, which surfaced only in a pleading note after inspection of the administrative file and argued that Ontex’s power of attorney had not been electronically signed by the principal, was declared inadmissible: the illegality was not evident, partly because in judgment no. 223.253 (Tractebel Engineering, 23 April 2013) the Council had already pointed to the tension with articles 89 and 94 of the Royal Decree of 8 January 1996. The Council rejected the action and ordered SCA to pay the costs, set at 175 euros.
Why does this matter?
The judgment sharply shows where the line runs between a permitted reference to the general law of the contract and a prohibited reservation. A tenderer cannot hide behind article 16 of the general contracting conditions to relativise a price guarantee: as soon as the tender goes beyond what that article allows — for instance by making the maximum price adjustable outside article 16’s strict scenarios — it is read as a conditional tender. And because this concerns a price element, that is no detail but an essential specification (article 89 Royal Decree of 8 January 1996), with substantial irregularity as the consequence. The judgment also confirms that an authority left with two irregular tenders may halt the procedure and switch to a negotiated procedure without prior publication (article 17, § 2, 1°, d) of the Act of 24 December 1993), provided it carefully motivates that step (articles 65/4 and 65/5). Finally, it recalls a procedural reality: new pleas that emerge only from the administrative file can be raised in a pleading note only if the illegality is evident and can be fully argued at the hearing — a threshold not met here.
The lesson
For tenderers: if the specifications require an unconditional performance commitment on price, give it unconditionally. A reference to revision rights under article 16 of the general contracting conditions is superfluous and dangerous: if your wording goes even slightly beyond that article, the authority will read it as a reservation, and for a price element that instantly costs you the regularity of your tender. For authorities: after two irregular tenders you may halt and switch to a negotiated procedure without prior publication, but expressly motivate that choice (articles 65/4-65/5) and show that truly all tenders were irregular. And for both sides: do not save arguments for the hearing that you could have raised earlier — a pleading note is no licence for new pleas unless the illegality is evident.
Ask yourself
Do your specifications require an unconditional price guarantee? Does your tender then really contain no reservation at all, not even an implicit reference to revision rights under article 16 of the general contracting conditions? Do you realise that a reservation on a price element touches an essential specification (article 89 Royal Decree of 8 January 1996) and leads to substantial irregularity, not to a merely curable shortcoming? As an authority: can you demonstrate that all tenders are irregular before switching to a negotiated procedure without prior publication, and have you motivated that halt? Do you discover a new argument only after inspecting the administrative file? Then know that a pleading note allows it only if the illegality is evident and fully arguable at the hearing.
About this database
The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →